A rule to prevent overseas oil bribery is on the GOP chopping block

Shell Bonga offshore oil Floating Production Storage and Offloading vessel off the coast of the Niger Delta in Nigeria. House Republicans are looking to scrap a rule that brings greater accountability to oil companies operating overseas. CREDIT: AP Photo/Sunday Alamba

The House will vote as early as Wednesday to nullify a rule that makes it harder for U.S. oil companies to engage in bribery and corruption in developing countries.

In June 2016 the U.S. Securities and Exchange Commission (SEC) finalized the “Disclosure of Payments by Resource Extraction Issuers” rule, requiring oil, natural gas, and mining companies to publicly disclose the billions of dollars they pay to foreign governments for drilling rights around the world. This rule — meant to promote transparency and fight corruption — now faces the prospect of repeal as Republicans look to rollback a myriad of Obama administration rules.

“On the same day as the Senate is considering the nomination of former Exxon CEO as next Secretary of State, the House of Representatives is deciding whether or not to vote to license the bribery and corruption that the oil industry has lived off for decades,” Corinna Gilfillan, head of the U.S. office at Global Witness, said in a statement. “We cannot stand by while the interests of a few powerful oil companies trump the safety and values of our country. We need this law to protect investors, developing countries, and our own national security interests.”

The SEC rule is the result of a bipartisan provision added to the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act by Senator Ben Cardin (D-MD) and former Senator Richard Lugar (R-IN). The rule requires U.S.-traded companies that “engage in the commercial development of oil, natural gas, or minerals” — both domestic and foreign, and their subsidiaries — to report payments at or above $100,000 to foreign governments. Payments include taxes, royalties, fees (including licensing fees), payments for infrastructure improvements, and community and social responsibility payments, many of which have been used by oil companies to bribe resource-rich foreign countries.

While at ExxonMobil, former ExxonMobil CEO and Secretary of State nominee Rex Tillerson personally lobbied against this provision, calling into question his support for greater transparency.

In his written response to the Senate Foreign Relations Committee, Tillerson acknowledged, “Part of my job…will be to make sure that because American companies, NGOs and development relief efforts are expected to play by the rules and abide by [the Cardin-Lugar rule]…and other laws, that foreign companies or investors do not get an unfair advantage by cheating or keeping to a lower standard.”

He won’t, if House Republicans are successful in their plan to use the Congressional Review Act to repeal the rule. The Congressional Review Act allows Congress to revoke rules issued by the executive branch within 60 legislative days of their finalization. CRA resolutions cannot be filibustered and require only a simple majority to pass in both chambers. If a rule is disapproved using the Congressional Review Act a “substantially similar” rule cannot be issued unless Congress passes new legislation.

Despite the current Republican effort to repeal it, the SEC’s anti-corruption rule is actually the culmination of Congress’s long-held bipartisan interest in improving the transparency of U.S. corporations’ mining and drilling operations in corruption-prone, resource-rich countries. Disclosure allows U.S. shareholders to see how much of their investment is flowing to foreign oligarchs. Moreover, citizens in these resource-rich countries can track foreign payments and, perhaps, ensure that more of the money is reinvested in public works — rather than tucked away in offshore accounts. Failing to do this only impedes economic development and political stability in already unstable regions around the world.

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As Sen. Richard Lugar (R-IN) put it when defending the provision in 2012, “The Cardin-Lugar Amendment puts transparency — the key to citizens’ ability to hold their government to account — ahead of corruption. To do otherwise is a losing proposition for the United States and company shareholders.”

Due in part to U.S. leadership, other countries, including Canada, the European Union, and Norway have adopted similar rules. Now 80 percent of the world’s largest oil, gas and mining companies, including state-owned companies from Russia, China, and Brazil, have to disclose their payments.